How 'Gray Divorce' Complicates Estate Planning

In its survey, TD Wealth looked beyond gray divorce to more traditional causes of family conflict for those engaged in estate planning.

Forty-three percent of estate planners and attorneys said not communicating the estate plan with family members was the most common cause of conflict, followed by dealing with blended families, cited by 29%.

Only 13% of respondents reported that designation of beneficiaries was a cause for conflict in 2020, well down from 30% who said this in the 2019 survey.

"While the purpose of estate planning is concrete, the factors and threats involved are far from it," Radigan said. "The goal for any estate planner should be to effectively cut through the noise and distractions to build stable plans with our clients and their loved ones."

Other Threats to Estate Planning

In TD Wealth's 2018 and 2019 surveys, participants identified family conflict as the leading threat to estate planning. In the 2020 survey, however, estate planners were split about the source of threats:

• Family conflict – 25%
• Tax reform – 25%
• Prolonged life expectancy and increased health care costs – 25%

The survey results showed that tax reform continues to have a big effect on estates and trusts. In response, estate planners are reconsidering the implementation of traditional strategies to work with the exemption, rather than treat it as an obstacle.

Thirty-nine percent of respondents said they suggested to clients to gift now when exemption is high.

At the same time, 23% of respondents suggested advising clients to consider trusts to protect assets from future claims, and 20% suggested planning to minimize future capital gains tax consequences.

"With changes among family structure and tax policies, paired with the fact that people are living longer with rising healthcare costs, the estate planning industry has to reflect these factors in their approach," Radigan said.

TD Wealth, he said, is advising some its clients to consider retaining more now — even though the exemption is higher on gifting now — because people are living longer and costs attendant on greater longevity are affecting their estate plans.

— Related on ThinkAdvisor:

• Advising Women Over 50
• What Divorced Women Should Know About Claiming Social Security
• 100 Questions to Ask in an Estate Planning Interview